Avago Q4 Sales Outlook Upbeat

Chipmaker, Avago Technologies Ltd. (NASDAQ: AVGO) said after the market close on Tuesday that net income dipped 2.1% in the fiscal third quarter. Higher operating expenses and narrower margin weighed on the bottom line. However, share gained in aftermarket hours as both earnings and revenue topped Wall Street’s estimates. The Company also handed better-than-expected sales guidance for the fiscal fourth quarter.

For the current quarter, the Singapore based company anticipates revenue to rise by 12% to 15%, sequentially, which implies revenue of $721.3 million to $740.6 million. Analysts polled by Thomson Reuters had forecasted revenue of $696 million.

For the fiscal third quarter ended Aug. 4, the Company posted a net income of $142 million or 56 cents a share compared to a net profit of $145 million or 58 cents a share, in the same quarter of last year.

Stripping out onetime items such as stock based compensation and other charges, the adjusted earnings stood at 74 cents a share up from 72 cents a share. Analysts’ consensus estimate was for 62 cents a share.

Net revenue rose 6.3% to $644 million from the year earlier quarter but was 15% lower compared to prior quarter.

In May, the company forecasted sequential revenue growth of 6% to 9%, or $595.7 million to $612.6 million.

“During the third quarter, strong demand from data-center spending and a significant uptick in industrial more than offset weaker-than-expected demand in wireless,” said Chief Executive Hock Tan in a conference call.

In June Avago completed its $400 million acquisition deal with CyOptics. The merger is expected to help Avago gain traction in data communications and telecommunications markets. In the latest period, CyOptics generated $21 million in the total revenue.

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.